SURYA NEPAL PRIVATE LIMITED - ITC i

SURYA NEPAL PRIVATE LIMITED
SCHEDULES TO THE ACCOUNTS (Contd.)
3. Show Cause Notice dated 19th January 2010 seeking to demand NRs. 196,537,807
(` 122,836,129) by way of Excise Duty for the financial year 2064-65 (2007-08).
Company's writ petition challenging the Notice was admitted by the Supreme
Court of Nepal. On 7th March 2010, Supreme Court of Nepal issued interim order
directing Inland Revenue Department not to raise demand, pending final disposal
of the writ petition.
VAT Demands
4. VAT demand letter dated 8th August 2007 for NRs. 57,238,860 (` 35,774,288)
relating to the financial year 2059-60 (2002-03). The Company's writ petition,
challenging the demand, has been admitted by the Supreme Court of Nepal on
12th September 2007 and it has issued Show Cause Notices to the respondents.
5. VAT demand letter dated 5th August 2008 for NRs. 10,718,107 (` 6,698,817)
relating to the financial year 2060-61 (2003-04). The Company's writ petition,
challenging the demand, has been admitted by the Supreme Court of Nepal on
5th September 2008 and it has issued Show Cause Notices to the respondents.
6. VAT demand letter dated 10th July 2009, for NRs. 106,966,056 (` 66,853,785)
relating to the financial years 2061-62 to 2063-64 (2004-05 to 2006-07). The
Company's writ petition, challenging the demand, has been admitted by the
Supreme Court of Nepal on 9th August 2009 and it has issued Show Cause Notices
to the respondents.
7. VAT demand letter dated 14th May 2010, for NRs. 114,691,649 (` 71,682,281)
relating to the financial year 2064-65 (2007-08). The Company has filed an
administrative review petition before the Director General on 11th July 2010, and
the matter is pending.
Income Tax Demands
8. Income Tax demand letter dated 12th August 2007 for NRs. 196,092,971
(` 122,558,107) relating to the financial year 2059-60 (2002-03). The Company's
writ petition, challenging the demand, has been admitted by the Supreme Court
of Nepal on 12th September 2007 and it has issued Show Cause Notices to the
respondents.
9. Income Tax demand letter dated 15th September 2008 for the financial year 2060-
61 (2003-04). Out of total demand of NRs. 22,536,944 (` 14,085,590) the basis
of the demand for NRs. 19,139,653 (` 11,962,283) is on theoretical production.
The Company's writ petition, challenging the demand, has been admitted by the
Supreme Court of Nepal on 8th December 2008 and it has issued Show Cause
Notices to the respondents.
10. Income Tax demand letter dated 16th October 2009 for the financial year 2061-
62 (2004-05). Out of a total demand of NRs. 22,626,609 (` 14,141,631) the basis
of the demand for NRs. 21,565,409 (` 13,478,381), is on theoretical production.
The Company has filed an administrative review petition before the Director
General, Inland Revenue Department on 18th December 2009. However, the
Director General without dealing with the issues raised by the Company, summarily
dismissed the petition by an order dated 2nd March 2010. The Company thereafter
filed an appeal before the Revenue Tribunal, on 17th June 2010, and the matter
is pending.
The Management considers that all the demands and show cause notice listed
above have no legal or factual basis. Accordingly, the Management is of the view
that there is no liability that is likely to arise, particularly in the light of the decisions
in favour of the Company by the Supreme Court of Nepal and the Inland Revenue
Department.
b) Other demands raised on account of:
1. Income Taxes for various assessment years amounting to NRs. 111,670,181 (`
69,793,863) {Previous year - NRs. 103,283,725 (` 64,562,328)} (net of provision
made for the above assessment years) against which the Company has filed appeals
with the appropriate authorities/Courts.
2. Value Added Tax matters under dispute, pertaining to financial years 2055-56 to
2057-58, amounting to NRs. 3,100,750 (` 1,937,963) {Previous year - NRs.
3,100,750 (` 1,937,969)},which are under appeal /reassessment.
C. Estimated amount of contracts remaining to be executed on capital account
NRs. 787,516,967 (` 492,198,104) {2067-68 NRs. 501,125,637 (` 313,203,523)}.
D. Remuneration to Managing Director:
Particulars For the year ended For the year ended
31st Asadh 2069 32nd Asadh 2068
(15th July 2012) (16th July 2011)
In NRs. In ` In NRs. In `
Salary, Bonus etc. (Short Term) 15,403,161 9,626,976 14,893,852 9,308,658
Post Employment Benefits * * * *
Total 15,403,161 9,626,976 14,893,852 9,308,658
*Post employment benefits are actuarially determined on overall basis for all employees.
E. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 132,670 (` 82,919) {2067-68 - NRs. 99,633 (` 62,271)}.
F. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under:
As at
As at
31st Asadh 2069 32nd Asadh 2068
(15st July 2012) (16th July 2011)
In NRs. In ` In NRs. In `
Deferred Tax Asset
On employees’ separation and retirement 30,234,585 18,896,616 10,598,101 6,623,813
On fiscal allowance on fixed assets 9,568,550 5,980,344 1,430,310 893,944
On doubtful advance 309,019 193,137 960,155 600,097
On provision for inventories 10,212,325 6,382,703 9,836,065 6,147,541
50,324,479 31,452,800 22,824,631 14,265,395
Deferred Tax Liability
On finished goods 17,100,988 10,688,118 11,909,609 7,443,506
Deferred Tax - Net 33,223,491 20,764,682 10,915,022 6,821,889
G. Reconciliation between tax expenses and accounting profit:
For the year ended
For the year ended
31st Asadh 2069 32nd Asadh 2068
(15th July 2012) (16th July 2012)
In NRs. In ` In NRs. In `
Accounting Profit 4,407,387,130 2,754,616,956 3,730,168,387 2,331,355,238
Tax at the applicable tax rate
(Cigarette manufacturing @ 30%, Garments
Manufacturing @ 20% and Trading @ 25%) 1,334,823,317 834,264,573 1,141,055,678 713,159,799
Factors affecting tax charge for the year
Effect of :
Unused Tax Losses not recognised 25,941,272 16,213,295 44,830,483 28,019,052
Expenses not deductible for tax purposes 3,353,215 2,095,760 258,336 161,460
Total Tax Expense 1,364,117,804 852,573,628 1,186,144,497 741,340,311
H. Capital
The Company is not subject to any capital adequacy norms under regulations presently in force. Employees Housing Reserve is set aside as required by law. It is the Company's policy to maintain
a sound capital base that is supportive of the Company's business plans. Return on capital employed is monitored based on asset turnover and profitability ratio.
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